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What is the F1 cost cap and how are breaches punished? Explaining the process as Red Bull found guilty of breaking budget cap

what is the f1 cost cap and how are breaches
what is the f1 cost cap and how are breaches

The FIA ​​has finally released its much-anticipated review of the cost cap for the 2021 season and it’s bad news for Red Bull as they were found to have flouted the sport’s financial regulations over the past year. Aston Martin was also found to be in breach of the regulations.

According to the report, released Monday after the 2022 Japanese Grand Prix, where Dutchman Max Verstappen sealed his second world title, Aston Martin is in a “procedural breach” of the regulations, while Red Bull has one procedural breach and one minor breach has committed Financial overspending (spending less than 5% of the cost ceiling) that could be penalized in the near future.

Aston Martin will likely either escape punishment altogether or face little action, as their infraction does not involve spending too much money. Instead, it’s rumored to be a series of administrative accounting log errors, similar to Williams’ breach earlier this season, which saw them go unpunished.

So far, no penalty has been imposed on Red Bull, who are currently on course to win the 2022 Constructors’ Championship, their first title since 2013.

What is the F1 cost cap?

Like any other sport, Formula 1 has struggled throughout its history with widespread inequalities in terms of teams’ purchasing power.

Hence, in 2021 the FIA ​​announced they would introduce a new cost cap in sport, a budget that teams must adhere to or face penalties if they break.

Put simply, the newly introduced cost ceiling is intended to make sport more sustainable, more balanced and more competitive.

While it won’t fully bridge the gap between the top teams like Red Bull, Ferrari and Mercedes and bottom teams like Haas and Williams, it should go a long way in making single team dominance in the sport much more difficult.

MORE: F1 2023: Confirmed driver and team line-ups for Formula 1 season

What is the F1 cost cap?

The 2021 cap in F1 has been set at $145 million, a fairly low sum considering the sport’s biggest teams have reportedly spent close to $400 million previously.

That $145 million was also a sizeable gap from the original plan of capping at $175 million in 2021, a figure that has been pushed due to the ongoing COVID-19 pandemic, which is putting several teams on the brink of serious financial distress brought difficulties was drastically reduced.

This season (2022) that budget was originally reduced to $140 million, although it has been adjusted accordingly due to inflation and rising prices around the world.

The number of races on the sport’s calendar and the additional sprint races during the season also caused this cap to increase.

Currently, F1’s 2023 cost cap is set at $135 million, but given inflation related to global events and the inclusion of additional races already announced for next season, the budget is likely to increase accordingly.

What does the F1 cost cap apply to?

As you can imagine in a sport as technical as Formula 1, the cost cap covers a wide range of different expenses.

The main ones cover basically everything related to the car’s performance, ie all car parts, all equipment needed to run the cars, most of the team staff, all workshop equipment and spare parts and all transport costs.

The engine, a complex affair with some teams buying theirs while others build their own, is exempt from this list, although it has its own cost rule.

Perhaps surprisingly, driver wages do not fall below the cost cap, nor do the wages of the team’s three highest-paid employees.

Other areas not covered by the expense cap include: travel budgets, marketing expenses, legal and material expenses, employee bonuses, staff sick leave and medical benefits, and other staff-related costs.

How did Red Bull break F1 cost cap rules?

Even though the FIA ​​initially ruled that Red Bull breached the 2021 cost caps, the fuller details of how and when have yet to be reported.

These details are likely to be made public in the coming weeks with the FIA ​​statement; “FIA Cost Cap Administration is currently determining the appropriate course of action to be taken under the financial regulations in relation to Aston Martin and Red Bull and further information will be communicated in accordance with the regulations.”

It’s also important to note that the team, which bears the name of the Austrian energy drink giant, can appeal the verdicts, which would likely further delay the release of the results to the media, opposing teams and fans.

Red Bull have since posted a response on social media in which they “take note of the results of the FIA… with surprise and disappointment”. They also claim that they believe they operated within cost cap regulations during the 2021 season.

pic.twitter.com/gJvpe2i7mA

— Oracle Red Bull Racing (@redbullracing) October 10, 2022

What happens to F1 teams that break the rules?

As the cap has only been in place since the start of the 2021 Formula 1 season, we have yet to see an example of previous penalties imposed by the FIA ​​on teams that breached the cap.

However, the FIA ​​​​set out possible penalties at the beginning of the implementation of the cost cap.

These penalties depend on whether a team’s financial violation was “minor” or “major.”

A minor infraction, meaning that a team has spent 5% or less extra over the cost cap, may be penalized by a public censure, a point deduction in both the Constructors’ and Drivers’ Championships, a race suspension or a future aerodynamic cap Review or a reduction of the cost ceiling for the following year.

A “material” breach carries the same potential penalties, plus possible banning of teams from the sport for that season.

Could Max Verstappen be stripped of F1 title?

In short, that’s highly unlikely as Red Bull’s breach has been classified as “minor” by the FIA.

With the team’s excess spending falling within the FIA’s “minor offences” range according to the initial report, the team is far more likely to face a hefty fine itself in the near future – a decision F1 fans are unlikely to see will appease overall.

If the Cost Cap Adjudication Panel, made up of six judges appointed by the FIA ​​and the teams, opts for a severe penalty instead, it is likely that it would order the payment of a fine as well as a cap on the team’s aerodynamic testing throughout the season 2023

Aston Martin is yet to comment on the results, but it’s very likely the most they will face is a fine for their procedural breach.

Written By

Dave Gallo is a pioneering sports analytics expert, renowned for his revolutionary work in AI-driven sports simulations, projections, and advanced statistical analysis. With a profound passion for sports and technology, he crafts cutting-edge computer models that accurately predict outcomes. Dave's game-changing insights have reshaped strategy, player evaluation, and decision-making across various sports. His dynamic presentations make complex analytics accessible and inspiring, ensuring his legacy as a visionary in sports analytics. Check out Dave's Pick Record.

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